This Git repository contains a case study for Square Inc. ("Square"), a financial services and digital payments company based out of San Francisco, CA. In recent years, Square has established itself as a dominant player in the rapidly evolving FinTech space. Square offers products and services across various FinTech domains, including:

1. Enterprise Solutions
2. Payments & Billing
3. Online Personal Finance, Banking, & Depositing
4. Blockchain & Cryptocurrencies

• Square Overview and Company Origin
• Key Products, Services, and Target Market
• Company Landscape
• Company Mission, Core Metrics, and Performance
• Recent Acquisitions and Potential Future Products
• Contributors
• References

Square was founded in 2009 by Jack Dorsey and Jim McKelvey. In the company's infancy, Square started as an idea to enable small businesses to process sales through a mobile payments platform. Jack Dorsey initially envisioned the idea for Square with Jim McKelvey, his former boss who was a high-end faucet & fittings glass blower looking for ways to expand his business's sales by offering additional payment methods beyond traditional cash payments. The idea for Square eventually evolved into the company's first product, the Square Reader. This square-shaped device enabled small-to-medium size business owners (i.e., Square "sellers") to affordably accept credit card payments for sales by downloading the Square application and connecting the reader to a mobile device.

Over the past decade, Square has evolved its product & service offerings well beyond it's initial Square Reader. Square now has an entire ecosystem of products for its sellers. This seller ecosystem includes an extensive suite of commerce, CRM, and banking solutions for businesses of all sizes within varying industries. In addition, Square has created the Cash App platform as a mobile payment service for the customers of its sellers.

According to crunchbase.com, Square has raised a total of $601.2M over 11 rounds of venture capital and equity funding to date. The company had several rounds of Series B through Series E funding in the years leading up to its IPO in November 2015, in which the company raised approximately $243M of equity funding at an implied market capitalization of approximately $2.9B.

In terms of Square's aspirations, the company has a clear goal of creating tools to empower and enrich all people. An excerpt from the company's website states the following:

No one should be left out of the economy because the cost is too great or the technology too complex.

We’re building easy tools to empower and enrich people. Tools that shorten the distance between having an idea and making a living from it — because we believe in fair and square.

~via Square

Square offers an ecosystem of software, hardware, & financial services products to help every business succeed. The company has empowered its sellers over the years by creating additional business tools and integrating financial banking services into its platform. The company now offers loans to its diverse seller pool to facilitate business funding. Square's key offerings include:

• Square Point of Sale (POS): Square offers a variety of POS devices & software for restaurants, retailers, and all other kinds of businesses
• Square Online: Square offers an eCommerce platform to design your restaurant or retail website online and integrate functionality with its Square POS devices
• Square Payments: Square offers multiple payment processing methods to enable customer sales, including in-person, online, or remote (invoice) payments

• Square Checking: Through Square Checking, businesses can access funds from Square sales instantly
• Square Savings: Through Square Savings, businesses earn 0.5% APY in savings (8x the national savings average)
• Small Business Loans: Recently added to Square's product offerings, small business can now receive automated loans of up to $250K. The loan approval process is automated based on sales through the Square platform

• Square Customer Directory: Square Customer Directory is a CRM software built into Square payment tools to analyze customer relationships and help drive customer management decisions
• Square Marketing: Square Marketing enables to businesses to design custom company emails, set up automated campaigns, and analyze marketing efforts.
• Square Loyalty: Through Square Loyalty, business can build a customized customer loyalty program directly from their Square payments tool

• Square Payroll: Square Payroll is a full service payroll, employee benefit, and tax filing solution for Square sellers
• Square Team Management: Through Square Team Management, Square sellers can schedule, manage, and pay their teams directly from their Square POS device

• Cash App: Through Square's Cash App mobile payment service, customers of sellers can send & spend money, deposit funds, or invest in stocks or Bitcoin. Additionally, there is recent new integrated functionality for customers to pay Square sellers for sales using the Cash App.

While Square's target market is primarily small-to-medium size businesses in the retail and food/beverage sectors, the company markets solutions for all types of businesses, no matter the size. Outside of retail and food/beverage, Square primarily focuses its marketing efforts on professional services (e.g., accountants & other financial advisory services, health & fitness businesses, beauty services, and home & repair businesses) as well as its large business platform. For large businesses, Square delivers an ecosystem of connected tools that enhance the customer experience, simplify business administration & management, and track customer relationships.

In an interview with B2B News Network in 2017, Jack Dorsey clearly identified Square's competitive advantage to other competitors:

“There have always been some differentiators, but the most important has been our cohesiveness,” he said. “We’re not just payments or POS but a suite of tools to help our sellers. The first critical thing was to enable sellers to make the sale. Then it was organizing the information to make more sales.

“Being able to see your business helps you make decisions, about inventory and how to market,” he said, adding that creating an experience where “the hardware and software goes away” with speed and self-service is important so that businesses can focus on things that are really important to them. “The elegance of our solution is unique to us. It all works together and you don’t have to think too much about it.”

~Jack Dorsey

In a recent interview with WSJ, Square's CFO, Amrita Ahuja, noted one of Square's key differentiators to its competitors:

"We have the ability to sit on both sides of the counter, and figure out the ways that we can add unique value to both the merchant and the consumer in the exchange."

In terms of technology, Square utilizes a handful of programming languages and database technologies in the development of its software applications. According to Square's company profile on Stackshare.io, the company uses software development technologies such as (but not limited to):

• Programming Languages: Ruby, Javascript, Objective-C
• Database Technology: MySQL, Redis, Vertica
• Cloud Storage: AWS EC2, Snowflake
• Application Development: Firebase

Beyond its software applications, Square also leverages newer technology to enable its POS devices and readers to accept customer payments. One specific technology is called NFC or "Near Field Communication". This technology enables smartphones & reader devices to communicate and execute secure, contactless payment through Apple Pay or Google Pay.

Last but not least, Square manufactures its own POS devices (i.e., restaurant card readers, in-store tablets, and other larger POS systems).

As eluded to in the introduction, the primary FinTech domains in which Square operates are (1) Enterprise Solutions, (2) Payments & Billing, (3) Online Personal Finance, Banking, & Depositing, and (4) Blockchain & Cryptocurrencies. Over the last 5 - 10 years, these domains have seen major innovations along with the rise of new competitors. In particular, the below section includes innovations and competitors within Square's FinTech domains:

1. Enterprise Commerce Solutions:

   • Major Innovations: Advanced software & hardware capabilities enable small-to-mid size businesses to streamline in-person sales, simplify web-based sales, and track customer relationships through CRM tools

   • Top Square Competitors in this Domain: PayPal Zettle, SumUp, Shopify, Toast (Restaurants), Vend (Retail), Clover

2. Payments & Billing:

   • Major Innovations: Advanced software & hardware capabilities (such as POS systems and other payment acceptance technologies (e.g., NFC)) enable simplified customer payment processing and billing & invoicing.

   • Top Square Competitors in this Domain: PayPal Zettle, SumUp, Shopify, Toast (Restaurants), Vend (Retail), Clover

3. Online Personal Finance, Banking, & Depositing

   • Major Innovations: The introduction of mobile payment & banking apps such as Square's Cash App have revolutionized the way in which people send, spend, deposit, and invest money. Additionally, banking and lending for small-to-mid size businesses has become much more accessible through programs such as Square Checking, Debit, & Savings. Through immediate online banking, businesses are able to instantaneously secure loans or access money based on customer sales.

   • Top Square Competitors in this Domain: PayPal, Zelle, Google Pay, Venmo

4. Blockchain & Cryptocurrencies

   • Major Innovations: The invention of cryptocurrencies over the last few decades has created an entire ecosystem of mobile payment and investing applications that can be used to buy and sell crypto. Most of these applications enable customers to deposit fiat currency funds, purchase cryptocurrency on various exchanges, and send cryptocurrency cross-border with limited roadblocks (due to decentralization).

   • Top Square Competitors in this Domain: PayPal, Venmo, Coinbase, and other Cryptocurrency Wallets/Exchanges

Square has provided thousands of its active sellers with a suite of software, hardware, and financial services to enable their businesses to succeed. Square's mission statement on its website states:

"We believe everyone should be able to participate and thrive in the economy."

"We’re here to help sellers of all sizes start, run, and grow their business — and helping them grow their business is good business for everyone."

Some of the key metrics that Square uses to measure its success are outlined below:

1. Cash App Ecosystem

   • New Customer Acquisitions: Represents growth in monthly transacting active customers on the Cash App.

     • Per Square's latest shareholder letter, the Cash App reached more than 36 million monthly transacting active customers in 2020, representing greater than 50% YOY growth.

   • Customer Acquisition Costs: Represents the cost to acquire each new Cash App customer.

     • Network effects of peer-to-peer transactions on the Cash App have allowed Square to maintain low customer acquisition costs of approximately $5 per new transacting active customer.

   • Gross Profit per Customer: Represents gross profit margin per new transacting active customer on the Cash App.

     • In December 2020, GP per new transacting active customer reached $41, up approximately 70% YOY.

   • Bitcoin Adoption: Represents the total number of customers that have purchased or sold Bitcoin through the Cash App.

     • In 2020, more than three million customers purchased or sold bitcoin on Cash App, and, in January 2021, more than one million customers purchased bitcoin for the first time.

2. Seller Ecosystem

   • Seller GPV (Gross Payment Volume): Represents the total gross payment value from Square's seller ecosystem. Seller GPV is composed of the total dollar amount of all card payments processed by sellers using Square, net of refunds.

     • Square saw massive growth in omnichannel sellers in 2020. An omnichannel seller is defined as a seller who has both in-person payments and online channel payments. In Q4 of 2020, GPV from omnichannel and online sellers represented more than half of Square total Seller GPV.

   • GPV and Gross Profit from Mid-Market Sellers: Represents the total gross payment value from Square's mid-market sellers (i.e., those generating more than $500K in annualized GPV).

     • In Q4 2020, Square's GPV from mid-market sellers grew 27% YOY.

On the whole, Square has performed exceptionally well relative to its peers. In terms of recent annual performance, Square grew its total revenue to $9.5B in 2020, representing a 101% increase compared to 2019. A large driver in revenue growth was Bitcoin purchased within the Cash App. In terms of profits, Square grew its total gross profits by 45% in 2020, up to $2.7B.

In addition the company's financial performance, Square's common stock (Ticker: SQ) has also performed incredibly strong compared to the overall stock market. The stock has grown by over 300% since January 2020.

In recent news, Square has announced two major acquisitions:

1. Afterpay: Announced in August 2021, Square agreed to purchase Australian-based "buy now, pay later" firm Afterpay Ltd. for $29B

   • Future Implications for Square: Square plans to integrate Afterpay into both its Seller POS and Cash App Ecosystems. "Buy now, pay later" is an attractive category for Square as consumer preferences are shifting away from traditional credit cards. Additionally, sellers view "buy now, pay later" as an opportunity to increase conversions, increase average order volumes, and acquire new customers.

   • Technologies: While its yet to be seen how exactly Square will integrate Afterpay into its offerings, it's likely that this additional service will be integrated within its POS systems as well as CRM tools for sellers. This will require enhancements to Square's software-based products and services through various programming language and database technology upgrades.

2. Tidal: Announced in March 2021, Square agreed to purchase Jay-Z's Tidal music streaming service platform for $297M

   • Future Implications for Square: Square has yet to launch any new products as a result of its acquisition of Tidal, however many see this acquisition as an opportunity to integrate a platform for artists into Square's seller ecosystem. This could include an e-commerce platform for artists along with improved payments and financing for live shows.

   • Technologies: Similar to the acquisition of Afterpay, its likely that this acquisition will result in additional software-based products & services offered by Square. In addition, there could be additional hardware product offerings for artist sellers.

Outside of its recent acquisitions, Square has also recently announced that it will create a new Bitcoin focused business as well as Bitcoin hardware wallet.

This project was created by:

Nick Baronti

• Email: nabaronti@gmail.com

• Phone: 847-239-0734

• LinkedIn: https://www.linkedin.com/in/nick-baronti/

• Investopedia: Square Company Background
• Talk Route: Founding Square
• Yahoo Finance: Square IPO
• Crunchbase: Square Funding
• Wikipedia: Square Background & Company Overview
• Square Website: About Square
• Square Website: Product & Service Offerings
• Square Website: NFC
• Motley Fool: Square History & Timeline
• Stackshare: Software Development Technologies
• Nerdwallet: Top Competitors
• 2020 Square Shareholder Letter
• 2020 Square 10-K Report
• WSJ Article: Square's CFO Interview
• Motley Fool: Tidal Acquisition
• Reuters: Tidal Acquisition
• Reuters: New Bitcoin Business
• Reuters: New Bitcoin Hardware Wallet
• Reuters: Afterpay Acquisition